UPDATE: Dec. 23, 2020: Nikola and Republic Services have now "discontinued their collaboration on refuse truck development," according to a release from the truck manufacturer. 

After previously announcing plans to design and build at least 2,500 fully-integrated electric collection vehicles – the industry's largest such order by far – Nikola said "both companies determined that the combination of the various new technologies and design concepts would result in longer than expected development time, and unexpected costs." That vehicle order has now been canceled.

A Republic spokesperson said "we continue to believe that electrification is the future," pointing to partnerships with Mack and Peterbilt, as well as an investment in battery startup Romeo Systems.

"We look forward to working with all of our OEM partners to capitalize on innovative new technologies, advance our fleet electrification goals and drive responsible growth and value creation, and are planning to make additional purchases from various suppliers in 2021," said the company.

Dive Brief:

• Solid waste industry leader Republic Services recently agreed to purchase 2,500 electric collection vehicles from Nikola Corp., pending performance, with the potential for up to 5,000 orders. This has been described as the company's largest truck order ever for its fleet of approximately 16,000 collection vehicles. Initial testing is expected to begin in Arizona and California, with wider-scale testing in 2022 and full deployment by 2023. 
• The vehicles are expected to have a 150-mile range, up to 720 kilowatt hours of battery capacity and the ability to collect 1,200 cans with one charge. Republic anticipates using them for automated side load and front-end load collections. Financial terms were not disclosed, but Nikola Founder and Executive Chairman Trevor Milton told the Wall Street Journal he expects each unit will cost under $500,000.  
• The existing Class 8 Nikola Tre chassis and powertrain will be used, with bodies licensed from an undisclosed company. A new cab is being designed specifically for Republic. Nikola will serve as the direct point of contact for all equipment and maintenance needs. 

Dive Insight:

This year has already seen growing interest in electric refuse vehicles, but the scale of Republic's order surpasses anything to date. Last year, Republic set a target to reduce its primary greenhouse gas emissions 35% by 2030. The company's fleet emissions accounted for 1.34 million metric tons of carbon dioxide equivalent in 2019 and have been gradually declining since at least 2016. Landfill emissions comprise the majority of Republic's overall greenhouse gas footprint.

According to a virtual press event on Monday, the two Arizona-based companies have been working together on this deal for about a year and Nikola is building a factory in the state. Milton's experience with waste applications and Republic President Jon Vander Ark's background in the automotive space were said to be helpful factors, leading to an "anchor tenant" commitment to bring Nikola's technology into the national waste and recycling industry.

“When you have something like this where you’ve got to do something truly new to the world, it takes a longer-term commitment and we were very comfortable making it because it reinforces our belief that this is where the space is going. This is what customers want, this is where all the economic incentives and regulation is pushing," said Vander Ark.

He said Republic's previously announced electric truck pilot with Mack is "very much ongoing," but Nikola's technology was repeatedly described as the current market leader. According to Milton, the Nikola model's horsepower capabilities are superior to current trucks and that will address capacity concerns around hills or other challenging conditions commonly associated with electric vehicles. 

In Milton's view, the waste industry is "absolutely primed" for disruption and its frequent stops are well-suited for regenerative braking capabilities. He believes Republic's order will be "the reason why the market will go electrified," but other haulers may have to wait until at least 2022 if they want to buy their own Nikola models.

"Our main focus is Republic because we have a guaranteed commitment, they’re all going to one place, we can service them easier. But we're not going to turn other people away. It just means we want to wait until it's perfect," said Milton. "Once those problems are worked out, we'll open it up to everybody."

Regulatory trends in states such as California are one motivating factor behind the electrification trend, but the decline in total cost of ownership is a primary driver. Maintenance savings, reduced occupational noise exposure for employees, and quieter streets for customers are among multiple other expected benefits.

“You’re not buying 2,500 trucks just because California has mandated it. You’re going to buy 2,500 to 5,000 trucks because you believe this powertrain option will ultimately help your operating efficiency and profitability," said Noah Kaye, a managing director and senior research analyst at Oppenheimer & Co. That trend, combined with Republic's initial move, "should spur on the development of competitive powertrain offerings for the sector."

Mack, Peterbilt, BYD, and Lion Electric are among other notable names pursuing their own electric refuse models. Applications are on the road or on the way in multiple states, including among municipalities and companies such as Recology, Waste Connections, and Waste Management.

Until recently, compressed natural gas (CNG) vehicles have still been the most commonly used diesel alternative for some large players. Pre-pandemic, Waste Management touted plans to potentially make 75% of its fleet CNG by next year and GFL Environmental has signaled plans to increase its own share. Republic recently reported its fleet is 20% powered by natural gas, with new fueling stations and 158 vehicles purchased in 2019, but Vander Ark minimized CNG's future role.

"While CNG does offer some environmental advantages versus diesel, it's incremental, and if you look at the major global OEMs, all of their R&D on the engine side is on electrification. People are not putting money into CNG. I think that's a bridge technology that's served its purpose, but doesn't offer the zero emission future that electrification does," he said, echoing comments made to Waste Dive in 2017.

Kaye thinks CNG will still be a part of the equation for some companies, and expects electric investment trends will be gradual to avoid capital expenditures bubbles, but said the Nikola news "signals a view that the future of refuse trucks is electric."